NET profit excluding foreign exchange gains for Sterling Investments Limited (SIL) was up 61 per cent during the first three months of 2015.

“This underscores the company’s continued ability to generate positive returns in real terms, even without the impact of depreciation.” said Marian Ross, AVP Business Development at Sterling Asset Management, in a recent press release.

This was the result of a 30 per cent rise in interest income, which moved from $11 million in the first quarter of 2014 to $14.4 million in the quarter under review, the release said.

The increase in realised income was also fuelled by a dramatic increase in the profitability of the company’s trading activity. SIL’s gains on sale of investments more than tripled from $795,000 in March 2014 to $2.8 million in March 2015.

“Many of the assets in SIL’s portfolio appreciated significantly in price during 2014. We took the decision to realise some of these profits and used them to fuel the continued growth of the company and also to reward shareholders in the form of US-dollar dividends”, Ross explained. The company’s portfolio consists of high- quality, liquid US-dollar assets, she said.

The decline in the price of oil fuelled a softening in global bond and equity markets. The anticipated rise in interest rates in the USA, economic weakness in the Eurozone, instability in Greece and an observed slowdown in large emerging markets are also fuelling volatility. That increase in volatility translates into more lucrative trading opportunities, but also results in greater swings in the value of securities, Ross said.

The portfolio has been restructured to take advantage of upside risks and to minimise the downside risks associated with the global macroeconomic and monetary policy changes.

SIL’s operating expenses increased by 22 per cent from $5.6 million during the first quarter of 2014 to $6.8 million in the review period. Still, the company maintains one of the highest net profit margins among companies listed on the Jamaica Stock Exchange (JSE), the release said.

As at March 31, 2015, SIL’s net profit margin was 50 per cent. The increase in fees was attributed to listing expenses and higher audit fees.

The company’s equity base also grew by 10 per cent year over year to $535 million at the end of the review quarter, while retained earnings increased by 54 per cent (from $61.3 million at end-March 2014 to $94.3 million at end-March 2015).

“The growth in book value highlights the growth in shareholder value and also the previous commitment of the directors to retain profits to fuel the growth of the company,” said Ross.